No RBI Word yet on KR Pradeep’s Appointment at Lakshmi Vilas

Professional links to cos he audits seen as a hindrance to his appointment as bank’s chairman

RBI is holding back the approval to appoint chartered accountant KR Pradeep as the chairman of Lakshmi Vilas Bank as the regulator believes his professional relationships may come in the way of decision making at the helm of the private sector lender. “KR Pradeep runs an accounting firm under his name out of Bangalore and handles the accounts of various corporates which is one of the concerns raised by RBI,” said a person familiar with the regulator’s view. “RBI has also asked the bank to suggest two new names for the post,” said the person not wanting to be identified. The Karur-based bank has been without a chairman for more than a year now after S Narayan retired in January 2011. PM Somasundaram, MD and CEO at the bank, could not be reached for comments. But Pradeep said in a text message: “RBI is actively considering my name for approval.” The central bank’s hesitation in the approval is also due to the fact that Pradeep falls under the promoter category, which owns about 11.5% stake in the bank, said the person. RBI is paranoid about people with corporate links at the top of a bank as there are chances of prudence in lending getting compromised. This is one of the reasons why it has been imposing conditions even in case of proposed new banking licences. The central bank has called the bank’s senior management for a discussion on the appointment this week. “They had asked us to submit two additional names but the question of doing that does not arise since Pradeep’s name has been cleared at the AGM,” said another person who knows the bank’s stance. “We are not pursuing the matter actively as there is an MD and CEO running the bank.” Somasundaram, an alumnus of Standard Chartered, joined Lakshmi Vilas Bank in 2010 to transform the sleepy community lender into a full-fledged bank that could prepare it to compete with the giants such as ICICI and HDFC Bank which have begun encroaching into its territory. While he managed to reduce the bad loans, it has a long way to go in terms of products and services.  “We are working hard to shed the image of an old private sector bank,” Somasundaram said in an interview with ET last year. “We want to play the role of a new generation bank by offering services on par with leading private sector banks. For this, we need to focus on retail and improve our services.”

ET